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Unforgiving investors are hammering social games company Zynga in after-hours trading following a disappointing second-quarter earnings report.

Shares were down 38% from Wednesday's closing price of $5.08 a share--already half their IPO price last December. The swoon appeared to take down Facebook too. Shares in the social network, which reports its second-quarter results Thursday, were down 8% in late trading.

The problem: Zynga, creator of popular games such as FarmVille, Mafia Wars, CityVille, and other Facebook games, provided an outlook that can't be construed as anything but alarming to investors. In particular, Zynga's acquisition of mobile games startup OMGPOP, maker of the Draw Something game, now looks unwise. From the release:

We are lowering our outlook to reflect delays in launching new games, a faster decline in existing web games due in part to a more challenging environment on the Facebook web platform, and reduced expectations for Draw Something. As a result, our updated outlook for 2012 is as follows:

Bookings are projected to be in the range of $1.15 billion to $1.225 billion.

Adjusted EBITDA is projected to be in the range of $180 million to $250 million.

Stock-based expense is projected to be in the range of $410 million to $430 million.

Capital expenditures are projected to be in the range of $370 million to $380 million, which includes the purchase of our corporate headquarters building in April 2012.

Our effective tax rate for non-GAAP net income is projected to be in the range of 50% to 60%.

Non-GAAP weighted-average diluted shares outstanding are projected to be approximately 845 million shares in the fourth quarter of 2012.

Full year 2012 non-GAAP EPS is projected to be in the range of $0.04 to $0.09.

Zynga earned only a penny a share, way under the 6 cents analysts had forecast and down from 5 cents a year ago. On a GAAP basis, Zynga lost 3 cents. Revenues rose 19%, to $332.5 million, but that was also below the Street's $344 million estimate.

Advertising revenues, however, grew 170%, to $40.9 million. Online game revenue, from sales of virtual goods used in the games, was up only 10%, to $291.5 million, and that was down $1.2 million from the first quarter.